Yesterday, the National Association of Personal Financial Advisors (NAPFA) announced that effective Jan. 1, 2013, it will only accept CFPs for full membership in the fee-only organization. Those full members are known as NAPFA-Registered Financial Advisors; other levels of membership include provisional member and sustaining/retired member.
Here’s how the NAPFA press release explained the group’s move: “The NAPFA National Board recognized the need to support the emerging profession of financial planning by rallying around a singular professional designation in the same way the public trusts that those holding a CPA, MD, or JD are meeting education, training, and ethics requirements. NAPFA’s decision can be viewed as an important consumer issue in an environment where the public is bombarded by an alphabet soup of designations that only professionals can be expected to understand.”
Pardon me for scratching my head. Not normally at a loss for words, the only comment I can come up with is that it’s a curious move, at a curious time, for purportedly, a curious reason.
Let’s start with that curious reason. Alphabet soup? Really? Yes, I get that there are a lot of “advisor” designations out there—too many in virtually everyone’s view. My confusion, however, stems from the fact that at least since 2010, NAPFA only accepted planners with one of two designations as registered members: the CFP, and the AICPA’s Personal Financial Specialist (PFS). So it’s not like this latest pronouncement is any great leap forward in the quest for fewer financial designations.
Even more puzzling, it’s a big slap in the face of the only other (than NAPFA) organization in comprehensive financial advice with arguably higher standards than the CFP Board. Accountants not only have more stringent educational requirements, but more rigorous testing, and more importantly, higher ethical standards. For instance, the AICPA Code of Professional Conduct requires all CPAs including PFS designees to not only “put their clients’ and the public’s interests first,” but to have integrity (defined as “doing what is just and right”), objectivity (“the obligation to be impartial, intellectually honest, and free of conflicts of interest”), and independence (which precludes “relationships that may appear to impair a member’s objectivity…”).